Module Application
Does the organisation maintain board-approved AML/CFT/CPF policies, designated compliance officers, group-wide programmes, independent audit functions, employee screening and training, and new product risk assessments to ensure effective governance of financial crime prevention?
Does an organisation establish and maintain risk-based customer due diligence controls that verify customers and beneficial owners, apply enhanced and ongoing due diligence, prohibit anonymous or unverifiable accounts, control third-party and CKYCR reliance, and apply applicable sector-specific onboarding requirements?
Does an organisation that is a reporting entity under applicable anti-money laundering requirements identify, assess, document and keep up to date its money laundering and terrorist financing risks across all relevant dimensions, include proliferation financing risk where required by the applicable sector framework, and implement controls proportionate to those risks?
Does the organisation monitor customer transactions on an ongoing basis, identify suspicious or unusual activity, and report prescribed and suspicious transactions to FIU-IND to ensure detection and disruption of financial crime?
Does the organisation to which applicable targeted financial sanctions requirements in India apply implement controls to screen for designated individuals and entities, report matches, prevent prohibited transactions and freeze assets as required under the UAPA and WMD regimes and applicable sector-specific requirements?
Does an organisation determine whether it is a reporting entity, maintain and retain required transaction and identity records, provide those records when required, and apply the AML/CFT controls applicable to its sector, activities and cross-border operations?
Module Scope
The India - Anti-Money Laundering and Counter Financing of Terrorism and Sanctions module addresses the legal and regulatory framework governing the prevention of money laundering and terrorist financing in India, together with applicable proliferation-financing requirements and targeted financial sanctions. It covers the responsibilities that may arise according to an organisation's activities, reporting-entity status, regulated sector and cross-border operations.
Regulatory coverage
The Indian AML/CFT framework comprises general statutory obligations applying to reporting entities, associated recordkeeping and reporting requirements, and additional requirements applying to particular regulated sectors, designated businesses and professions and notified activities.
The module also addresses targeted financial sanctions requirements relating to terrorism and weapons of mass destruction. These operate through separate regimes governing designated persons and entities, prohibited dealings, reporting requirements and the freezing or restriction of affected funds and assets.
The precise requirements applicable to an organisation may differ according to its activities, sector and regulatory status. Sector-specific obligations are therefore addressed within their relevant scope and are not treated as applying universally to all organisations.
What the module helps organisations do
The India - Anti-Money Laundering and Counter Financing of Terrorism and Sanctions module provides information to organisations about how to comply with legal responsibilities when dealing with the following:
- Establishing appropriate governance, accountability and oversight for AML/CFT and applicable proliferation-financing responsibilities
- Identifying, assessing and managing money laundering, terrorist financing and applicable proliferation-financing risks
- Identifying and verifying customers and beneficial owners and addressing higher-risk customer relationships
- Maintaining current customer information throughout relevant business relationships
- Identifying and assessing unusual or potentially suspicious transactions and activity
- Meeting prescribed transaction and suspicious transaction reporting responsibilities
- Complying with applicable targeted financial sanctions requirements relating to designated individuals and entities
- Maintaining and retaining required customer, beneficial ownership and transaction records
- Responding to regulatory enquiries, information requirements and other applicable requirements of competent authorities
- Identifying additional sector-specific and cross-border AML/CFT responsibilities
The India - Anti-Money Laundering and Counter Financing of Terrorism and Sanctions module also comprehensively covers requirements arising under key Indian frameworks, including:
- The Prevention of Money-laundering Act, 2002 and associated recordkeeping requirements
- The Prevention of Money-Laundering (Maintenance of Records) Rules, 2005
- AML/CFT and KYC requirements applying under relevant RBI, SEBI, IRDAI, PFRDA and IFSCA frameworks
- FIU-IND requirements applying to relevant reporting entities, designated businesses and professions and notified activities
- Targeted financial sanctions requirements under the Unlawful Activities (Prevention) Act, 1967 and associated implementation arrangements
- Targeted financial sanctions requirements under the Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 and associated implementation arrangements
Applicability
The module applies to organisations whose activities fall within the Indian AML/CFT or applicable targeted financial sanctions framework. The requirements applying to a particular organisation depend on factors including its activities, sector, regulatory status and whether it falls within a reporting-entity or other notified category.
The module is relevant both to organisations operating in India and, where the applicable sectoral framework extends to those activities, to relevant overseas branches, subsidiaries or cross-border operations.
The India - Anti-Money Laundering and Counter Financing of Terrorism and Sanctions module should be subscribed to by any organisation that:
- Is, or may be, a reporting entity under the applicable Indian AML/CFT framework
- Operates as a banking company, financial institution, regulated intermediary or other entity subject to sector-specific AML/CFT requirements
- Carries on a designated business, profession or notified activity that may fall within the reporting-entity framework
- Is subject to targeted financial sanctions requirements because of its activities or sector
- Requires guidance in determining which AML/CFT requirements apply to particular activities, customers or business operations
- Conducts relevant cross-border activities through branches, subsidiaries or other operations to which Indian sector-specific AML/CFT requirements apply
Consequences of non-compliance
Non-compliance with applicable AML/CFT requirements may result in regulatory investigation, written warnings, directions to remedy deficiencies, requirements to report on remedial action and monetary penalties. Under the general PMLA enforcement framework reflected in the module, monetary penalties may range from ₹10,000 to ₹1 lakh for each failure.
Depending on the organisation, the conduct involved and the applicable regulatory framework, additional consequences may include regulatory sanctions, consequences affecting registration or the ability to undertake regulated activities and liability for responsible officers. Certain contraventions of targeted financial sanctions requirements may also result in criminal liability.
Closing
The India - Anti-Money Laundering and Counter Financing of Terrorism and Sanctions module provides organisations with a structured framework for understanding the financial crime obligations applicable to their activities in India. By bringing together governance, financial crime risk assessment, customer identification, transaction reporting, targeted financial sanctions, recordkeeping and regulatory cooperation requirements, the module supports organisations in identifying applicable responsibilities and maintaining compliance across the relevant AML/CFT and sanctions framework.